Barron's - USA (2020-10-12)

(Antfer) #1

October 12, 2020 BARRON’S 15


AMC’s net debt-to-Ebitda (earnings be-


fore interest, taxes, depreciation, and amor-


tization) ratio was about 15 at the end of last


year, and is nearly 500 now, according to


FactSet. “We have substantially increased


our cash reserves and improved our liquid-


ity in other ways to extend our financial


runway into 2021,” CEO Adam Aron said in


August. But even though AMC is open, sales


are weak, S&P notes. “We expect the com-


pany’s cash burn will remain elevated and


could accelerate further over the remainder


of 2020 unless there is a significant im-


provement in attendance levels relative


to the September box office.”


IMAX (IMAX), whose giant-screen


format makes it popular for action movies,


recently told B. Riley’s Wold that it expects


positive cash flow in the fourth quarter,


after a monthly cash-burn rate of $9 million


under Covid-19 lockdowns.


IMAX said on Oct. 8 that it will furlough


about 150 employees for at least two


months beginning on Oct. 26. The move


will allow the company to “temporarily


retrench, conserve resources, and adjust


its operations” in response to the lack of


Hollywood releases and theater closures.


The furloughs will not affect operations


in China and Japan. IMAX ticket presales


in China, where it has half of its 1,500 the-


aters, are running 10% above last year’s


levels for National Holiday week, which


was Oct. 1-8. China “has emerged as an


engine of stability for IMAX,” said its


CEO Rich Gelfond in a statement.


Film studios keep pushing back the pre-


mieres of blockbusters, including Wonder


Woman 1984 , delayed by Warner Bros., and


Candyman , which Universal has pushed to


next year. MGM again moved its James Bond


movie, No Time to Die , to next April. The


canary in the coal mine was Tenet , Christo-


pher Nolan’s sci-fi thriller that opened on


Labor Day weekend and was supposed to be


a gate crusher. Instead it has attracted a


tepid $300 million or so in box office sales,


most of that outside the U.S.


“Even with no competition and every


open theater going full throttle, the num-


bers were underwhelming,” Greenfield


said. “Consumers are just not ready.”


But one promising sign is that the re-


leases are being postponed, not moved to a


streaming platform, as Disney did with its


live action Mulan last month. Studios make


more money premiering big titles in tradi-


tional theaters, says David A. Gross, who


runs Franchise Entertainment Research.


“The theatrical business is broken right


now,” Gross tells Barron’s. “Netflix and


Disney+ are having their moment, but


when you really tear into the numbers,


no one is concluding we should run the


theater movies to the small screen.”B


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